Police yesterday arrested nine men suspected of being part of a criminal gang that conspired to swindle scores of UK charities out of hundreds of thousands of pounds in one of the most sophisticated frauds in recent history.

The men are alleged to have created a complex scheme to defraud charities such as Children in Need, Comic Relief and Barnardo's, as well as the former National Lottery Community Fund (NLCF), now renamed The Big Lottery Fund.

It is believed the gang made hundreds of false applications for cash from charities, lottery funds and other donor organisations including businesses, voluntary organisations and the Bridge House Trust, part of the Corporation of London.

The gang is thought to have posed as representatives of African-based charities working on behalf of Congolese refugees. According to sources familiar with the scam they were well versed in the terminology of grant applications and knew how to word their appeals for cash from the charities in a highly effective manner.

The sophisticated nature of the sting operation will prompt searching questions from the Charity Commission which will want to know how the UK charities were allegedly deceived into giving away somewhere between £500,000 and £1 million in the form of grants.

There was speculation last night that the commission might freeze a number of charities' accounts as part of the investigation process.

A spokeswoman for the organisation said: 'We are aware of the concerns and have been liaising with the police. We have received information from various funders and are assessing the information so we can take swift and appropriate action.'

The scam emerged in September when an anti-fraud team working for the NLCF discovered a suspicious pattern in grant applications. The NLCF alerted Scotland Yard, who, in conjunction with the Charity Commission, checked the names across a range of applications for grants made to other charities and discovered a cluster of similar addresses behind regular requests for cash.

'It was a pretty sophisticated operation. They were making multiple applications and using multiple identities,' said one source familiar with the scheme.

Last night it emerged that the Charity Commission was examining applications for grants made to between 400 and 500 good causes. However, it is thought the actual number of defrauded organisations will only be a fraction of this when the investigation is complete.

It is thought the gang managed to evade suspicion by restricting their applications for funds to amounts of between £500 and £5,000.

Last night a spokeswoman for Scotland Yard confirmed: 'Nine men have been arrested and are being questioned. Investigations are ongoing.'